stalled by staff resignations and delays inthe provincial land acquisition process.The time limit on mandate to sell hasexpired more than once. A key problem isthe lack of a champion within the SocialWelfare Department. There is a possibilitythat the national departments of HomeAffairs and Labour may build new officesin <strong>KwaMashu</strong>, but neither departmenthas made a clear decision.The development of Bridge City as a newregional node for the whole INK area,2km from KMTC, may reduce the ability ofthe KMTC project to attract governmentdepartments to the town centre.The danger is that there may be too manynodes, or that the lack of shared objectivesin respect of the delivery of governmentservices may mean that nodes competewith, instead of complementing, oneanother. The Bridge City project hasproposed the establishment of agovernment services mall.the former townships. The project teamconvinced the developer to investigatethe KMTC opportunity, supported by aclear picture brochure and data aboutdisposable income, thresholds andeconomic viability. The team and companyrepresentatives explored a number ofparcels of land owned by the municipality.However the developers were interested ina different area that included some landparcels not owned by the municipality.The team decided to support this initiativebecause they saw it as a catalyticdevelopment.A key challenge was related to landassembly – acquiring the parcels ofland necessary to make up the site thatthe developer wanted. The developersapproached the holders of the relevantdeeds of grant and negotiated to‘purchase’ the lease. There were difficultieswith locating owners and establishing aprice, including establishing the quantumof rates arrears on the property.But the leases were duly purchased.The municipality sold a piece of landrequired to complete the parcel by privatetreaty to support the development. 4At the time the land assembly processstarted, there was no town planningscheme to make developments of thiskind possible, and no private ownershipof land was possible. In 2003, the KMTCproject team launched an applicationunder the Development Facilitation Actto put in place a town planning layoutfor the town centre, together with zoningand development regulations, and thebasis of a new general plan and the saleof land with full freehold title. In 2005, theteam launched an application for anamendment to the zoning scheme thatwould allow the land assembled for the<strong>KwaMashu</strong> Shopping <strong>Centre</strong> to be used forthat purpose.<strong>KwaMashu</strong> Shopping <strong>Centre</strong>A scout working for a private-sectordevelopment company was looking foropportunities to establish a presence in4The Municipal Finance Management Act requires that municipal land be sold by tender, unlessthere are good reasons to deviate from this principle. In this case, the land could be sold by privateagreement because it is expensive to develop – it contains a stream and the underlying rocks are shale– and because it was in the public interest to facilitate the development of a major shopping centre.12 13
A tenure upgrading process was takingplace at the same time to survey the landon the original town plan, consolidatecertain parcels and subdivide others,and register the land in the deedsregistry. This was essentially catching upon what government failed to do whenit established the township in the 1950s.Once the land was properly registered inthe deeds office, it was possible to havefreehold ownership. Without tenure security,there would have been limited privatesectorinvestor interest.A key determinant of investment wassafety and security. The fact that the MetroPolice station was being built close to theshopping centre site was a key factor inthe developer’s decision to proceed.Because shopping centres generate largeamounts of traffic, municipal approvalpartly depends on sufficient developerinvestment in road improvements androad safety. The planned entrance to theshopping centre was at a dip in the road.This is a road safety hazard that would,under other circumstances, have to becorrected at the developer’s expensebefore planning approval could beobtained to proceed. In the <strong>KwaMashu</strong><strong>Town</strong> <strong>Centre</strong> case, this additional expensewould have caused the developer towithdraw. The KMTC plan had always beento upgrade the road at a later stage atmunicipal expense. In view of the catalyticimportance of this proposed development,the project team switched infrastructurefunding allocation priorities to fill in thedip immediately as part of the upgradingof this section of Malandela Road.This secured the investment.Property investment decisions are basedon market cycles. There are good andbad times to invest. The shopping centredeveloper’s message to the project teamwas that it would invest if the centre couldbe opened by December 2005. If thatwere not possible, the planned investmentwould be withdrawn. On the basis of firmcommitments from the project team,the developer started work on theshopping centre.The project team’s attitude in this casewas that it would work with the developerto ensure everything would be done tosecure the complex. In parts of the citywhere the land market works properly thiswould not have been necessary. But a keypart of establishing a functioning propertymarket is mobilising investment, and thisparticular investment was significant – aR75 million 11 000m 2 shopping centre, withsubstantial anticipated catalytic effects.The key points relevant to private-sectorinvestment from this experience are:• Being able to quickly and clearlycommunicate the situation to an investor.• The importance of a flexible response toland assembly constraints.• The importance of a predictable landlegal framework.• Flexible, adaptive and responsiveplanning.• Understanding the long-term propertyinvestment cycle and respondingappropriately.• Ensuring investment in safety and security.• Being willing to undertake road andpublic environment improvements atmunicipal expense, and providing a safeenvironment at the same time.Mixed-use residential investmentThe mixed-use residential investmentcomponent was intended to provideprivate-sector opportunities in the ‘gap’housing market. This market segment iscomposed of people who earn morethan the income ceiling for a subsidisedgovernment house, but too little to buyinto the formal housing market – definedas people earning a combined income ofbetween R7 000 and R15 000 a month.The KMTC project team had preparedplots for freehold title, zoned the land formixed use, provided bulk services, andhanded it over to the municipality to sellby public tender. The team recommendedsplitting the land into smaller parcels andawarding these to a range of bidders. Thiswould have resulted in more than one kindof housing option, and would have spreadthe risk. But the council decided to awardthe entire parcel to a single bidder.Had the land been packaged in smallerparcels, these could have been releasedone at a time, increasing the chances thatmore than one developer would be activein the market. This would also have madeit possible to test market interest withoutrisking the entire parcel.While there was a strong interest amongbidders in the housing component of the14 15